When it comes to deciding how best to transfer one's assets to the next generation, no age is too early start. So say observers who have watched the number of pre-retirement boomers engaged in estate planning steadily rise in recent years. And advisors would do well to take notice, they say.
"Over 50% of people asking for estate planning advice [are] 10 to 15 years from retirement," says Edmond Walters, founder and CEO of eMoney Advisor, Conshohocken, Pa. "If you're not positioning yourself as an advisor to fulfill their wealth transfer needs, then you're going to be out of a job."
Why are boomers engaged in estate planning earlier than in years past? Sources interviewed by National Underwriter credit in part the financial press and the proliferation of financial planning seminars with raising boomers' awareness about the value of estate planning. A second reason, experts say, is that boomers want to avoid the mistakes of their parents.
Many have watched with anger or disappointment the consequences of inadequate–or completely absent–planning by their elders: Funds once earmarked for the next generation redirected to pay for a parent's long term care, disputes over the disposition of wealth thrown into probate court, and adult children or grandchildren receiving inheritances much later in life because of a parent's unexpectedly long life span.
"We're at a point now where the average age upon receiving an inheritance is greater than the average age at retirement," says Edward "Foss" Hooper, a chartered financial consultant and principal of Hooper Law Office, Appleton, Wis. "We have people retiring in their 50s who may be in their 60s or 70s when they inherit. And if some of these boomers make it to their 90s, their children will only receive an inheritance when they reach their 70s."
Often, the windfall received from a parental bequest is what triggers the estate planning. Or boomers will wrap the legacy planning in a comprehensive financial plan encompassing retirement, charitable, disability and tax planning, among other objectives. Either way, sources say, the earlier planning has two advantages: (1) Boomers have more time to refine objectives regarding the ultimate disposition of assets; and (2) securing life insurance to fund estate planning goals will be less of an issue, both in terms of mortality costs and insurability.
Observers note, too, that clients generally have progressively greater difficulty dealing with estate planning issues as they age. One result, says Dan Gasink, an estate planning attorney at Ferris & Associates, Williamsburg, Va., is that they tend to rely on, and be unduly influenced by, certain children when making decisions. They tend also to make those decisions based more emotional rather than rational reasons.
